Customers’ short-term decision-making due to cost of living ‘should be a concern’ for sector

Insurance customers that make “short-term decisions as a consequence of the macroeconomic recessionary style environment” is “a concern to all of us in the [insurance] market”, according to Adam Winslow, UK and Ireland general insurance chief executive at Aviva.

Speaking exclusively to Insurance Times, Winslow observed that during cost of living crunches, fraud typically increases across personal lines books, while underinsurance becomes more common across SME customers.

These “short-term decisions” to cut costs or attempt to recoup cash pose “a concern to all of us in the market - and each of us needs to do our bit to point that out”, Winslow said.

Enforcing informed decisions

In terms of combating underinsurance, Winslow believes the answer lies with insurers “providing brokers with the tools to have the right conversation with their clients to prevent [underinsurance] from happening, or at least [making] sure [that] clients acknowledge [they are reducing their cover] so they’re making an informed choice”.

As long as customers are making an informed decision, brokers and insurers then “don’t run that risk of [a claim coming] in, [the] client is then disappointed with the amount they’re receiving and can’t set themselves back in the same position they once were”.

Underinsurance challenges – including out of date sums insured – will continue to be “a big focus” in the first three to six months of 2023, Winslow added.